**4. Expected culture in Croatian construction industry as a direction of potential organizational change**

Up to now, presented arguments qualify organizational culture as an important issue that should be carefully managed in order to increase the probability of achieving better results and competitive advantage at all levels. Additionally, it should be appreciated that organizational culture is a phenomenon built and adjusted over a longer period of time. Usually, organizational culture is initially determined by the founder of the company. However, as every organization is actually a dynamic entity existing in a changing environment, the task of management is to continuously develop and adapt the organizational culture to ensure its adequacy to elements of internal and external business environment [19]. If trend is acknowledged as the development tendency of a phenomenon [36], one could conclude that it is important to consider trends while analyzing organizational culture. This means that appreciating the culture identified as preferred for the future is an important aspect of managing the organizational change and adapting to the environment.

During the course of the study presented in this chapter, future organizational culture of the Croatian construction industry was tested both from the aspect of existing engineers and the aspect of civil engineering students.

Parts of the research [21, 22] testing the preferences of the existing engineers identified a discrepancy between the current and preferred type of organizational culture in Croatian construction companies. These results are presented in **Table 3**.

Obviously, predominant preferred culture type is clan, which could lead to construction companies becoming a friendly place to work in, actively encouraging loyalty and collaboration in the workplace. In organizations like that, managers act as mentors and success is a result of a high commitment. Additionally, Welch's t-test showed that, at the significance level 0.05, clan is the dominant preferred culture type of the whole population. Therefore, propensity toward team work and family-type organizations turns to be a prevalent way of thinking in the overall construction industry in Croatia.

The mutual relation of current and preferred organizational culture in the Croatian construction industry can be presented as in **Figure 2**, with dotted line showing the preferred culture and the full line showing the actual, current organizational culture.

Preferred organizational culture was determined also for the relevant subcategories of the construction industry [22]. As expected, after identifying clan as being an absolutely dominant culture type wanted in future, almost all the tested subcategories expressed their preferences toward it. Only a couple of subjects would prefer hierarchy as the culture type wanted in the future:

• supervisors,

companies under public ownership, and later results showed that the hierarchy is a typical culture profile of public companies. Furthermore, civil engineering contractors show the mixture of the market and the hierarchy culture profiles, while building construction contractors and designers function as predominantly clan type organizational cultures. Therefore, although the Croatian construction industry's sample proved to be primarily hierarchy type, as stated earlier, testing different subcategories of subjects additionally confirmed that none

Such conclusions are in accordance with the study of the UK construction industry [32], which interpreted hierarchy culture as appropriate for civil engineering contractors, who are usually formal organizations in which control and coordination are achieved by using formal methods and procedures. On the other hand, the study marked designers as informal organizations in which control and coordination are achieved through empathy between organizational members and through direct personal contact, typical for the clan culture. Other studies revealed similar results as well. For example, market culture presence in contracting rather than in designing companies was indicated as compliant with the dynamic nature and

Another distinction [22], worth of exploring, was organization's size. The size of the companies was measured by the number of employees, as illustrated in **Table 2**. It was detected that small companies with up to 49 employees, and especially the micro-companies with up to 9 employees, feel that they function within the clan type of the organizational culture. But, it seems that once a company reaches a certain size, hierarchy makes everyday business both more efficient and comfortable. Therefore, organizational culture type recorded as the current in medium sized and large organizations is hierarchy. Hierarchy tendency growing in line

Differences regarding organizational culture depending on the ownership of analyzed organizations were investigated in terms of public and private ownership as well as in terms of

Current differences concerning the identified mixture of the clan and market type organizational culture in private companies and absolutely dominant hierarchy type organizational culture in public companies, could be overcome if managers in both subcategories would acknowledge their influence on communication and performance and try to manage longterm organizational change toward the desirable culture type, which will be presented later

As for the differences regarding predominantly domestic or foreign ownership of organizations in the Croatian construction industry, hierarchy appears to be the dominant culture type

Finally, analysis based on geographical differences [22] was conducted as well. The very south and the very north of the Adriatic coast (Dubrovnik region as well as Istria, Kvarner and Primorje) show the current domination of the clan culture type, while construction companies in other parts of Croatia currently function within the hierarchy culture. Hopefully, physical

distance of these regions reduces the risk of conflicts among belonging companies.

of the culture types has an absolute dominance over the overall industry.

competitive environment of site management [33, 35].

domestic and foreign ownership [22].

in the chapter.

92 Organizational Culture

in both subcategories.

with the company size has been reported by other scholars too [17].


#### 94 Organizational Culture


questionnaire, but measuring only the preferred culture. Sixty-three students completed the questionnaire, which comprises 86.3% of the selected population. The nature of the sample is

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By analyzing the whole sample, it was found [23] that most of the students, namely 38.9% of respondents, preferred the clan as the type of organizational culture they would like to experience after graduation. Evidently, students' preferences coincide with previously presented preferences of the employed in construction industry in Croatia. Engineers and future engineers seem to aspire to work in a company whose success is primarily the result of employee loyalty, tradition as well as mutual cooperation and respect of all employees. Overall stu-

As seen from **Table 5**, the dominant clan culture, adhocracy and hierarchy were identified as approximately equally desired organizational cultures, while the least preferred culture type was market. As adhocracy encourages risk-taking and experimentation with new knowledge and technologies, which makes such companies dynamic, innovative, creative and highly entrepreneurial [30] and thus more successful than the others [29], it is promising that adhocracy type won such a high score. On the other hand, high preference of the hierarchy culture suggests that, even by the young, modern organizational development imposed by the nature of work in construction industry is not fully recognized. Hierarchy organizational culture is just as good as any other culture type, but it is more appropriate for activities where rigid forms and procedures are necessary. On the contrary, modern construction industry is characterized by organic organizational structures, such as project and matrix structures, increasingly replacing traditional hierarchical structures [23]. As for the market organizational culture, its

**Responding students' characteristics Frequency Ratio (%)**

35 28

17 29 17

25 26 12

31 32 55.56 44.44

26.98 46.03 26.98

39.68 41.27 19.05

49.21 50.79

described in detail in **Table 4**.

*Gender* Male Female

*Faculty department* Hydro-technics Bearing structures

*Desired future employment*

*Desired place of work*

Contractor Designer Other

Croatia Abroad

dents' preferences are presented in **Table 5**.

Organization, technology and management in construction

**Table 4.** Descriptive statistics of the selected students sample [23].

**Table 3.** Preferred organizational culture in Croatian construction companies [21].

As all the others prefer friendlier and more participative work environments characterized by the clan organizational culture and since the share of the discrepancies detected above is rather small, they are not considered very risky regarding potential disputes in construction projects.

Furthermore, this study was also complemented by the analysis [23] exploring which organizational culture type is preferred by civil engineering students in terms of their desirable employer in the future. This analysis started with the assumption that organizational culture of a company is primarily formed by employees working at a certain management level, having the power to influence the values and basic assumptions that are respected by others. Furthermore, civil engineering students are the population that will most likely attain management positions in construction companies over time, which makes their expectations and preferences relevant to development tendencies.

The analysis [23] was conducted among full-time students in their final year of study at the Civil Engineering Faculty Osijek, Croatia. The study was based on previously described OCAI

**Figure 2.** Relationship of current and preferred organizational culture in Croatian construction industry [21].

questionnaire, but measuring only the preferred culture. Sixty-three students completed the questionnaire, which comprises 86.3% of the selected population. The nature of the sample is described in detail in **Table 4**.

By analyzing the whole sample, it was found [23] that most of the students, namely 38.9% of respondents, preferred the clan as the type of organizational culture they would like to experience after graduation. Evidently, students' preferences coincide with previously presented preferences of the employed in construction industry in Croatia. Engineers and future engineers seem to aspire to work in a company whose success is primarily the result of employee loyalty, tradition as well as mutual cooperation and respect of all employees. Overall students' preferences are presented in **Table 5**.

As seen from **Table 5**, the dominant clan culture, adhocracy and hierarchy were identified as approximately equally desired organizational cultures, while the least preferred culture type was market. As adhocracy encourages risk-taking and experimentation with new knowledge and technologies, which makes such companies dynamic, innovative, creative and highly entrepreneurial [30] and thus more successful than the others [29], it is promising that adhocracy type won such a high score. On the other hand, high preference of the hierarchy culture suggests that, even by the young, modern organizational development imposed by the nature of work in construction industry is not fully recognized. Hierarchy organizational culture is just as good as any other culture type, but it is more appropriate for activities where rigid forms and procedures are necessary. On the contrary, modern construction industry is characterized by organic organizational structures, such as project and matrix structures, increasingly replacing traditional hierarchical structures [23]. As for the market organizational culture, its


**Table 4.** Descriptive statistics of the selected students sample [23].

As all the others prefer friendlier and more participative work environments characterized by the clan organizational culture and since the share of the discrepancies detected above is rather small, they are not considered very risky regarding potential disputes in construction

Furthermore, this study was also complemented by the analysis [23] exploring which organizational culture type is preferred by civil engineering students in terms of their desirable employer in the future. This analysis started with the assumption that organizational culture of a company is primarily formed by employees working at a certain management level, having the power to influence the values and basic assumptions that are respected by others. Furthermore, civil engineering students are the population that will most likely attain management positions in construction companies over time, which makes their expectations and

The analysis [23] was conducted among full-time students in their final year of study at the Civil Engineering Faculty Osijek, Croatia. The study was based on previously described OCAI

**Figure 2.** Relationship of current and preferred organizational culture in Croatian construction industry [21].

projects.

94 Organizational Culture

preferences relevant to development tendencies.

**Culture type Mean score** Clan 33.97 Adhocracy 23.64 Market 16.21 Hierarchy 26.18

**Table 3.** Preferred organizational culture in Croatian construction companies [21].


Countries around the world are at different stages of their development and thus at a different level of their competitiveness. Building on previous findings [38–40] that some culture variables affect economic and business performance at the country level, a more detailed crosscountry investigation of national culture's role in explaining competitiveness was conducted

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As for the national culture dimensions, this study [24] relied on Hofstede's culture dimensions. Hofstede and his team defined six different dimensions and based on their comprehensive studies, they attributed specific scores to each dimension, so they would describe the

**1.** Power distance illustrates the degree to which inequalities in the society are expected and accepted by all, and especially the less powerful members of that society. High power distance index (PDI), with score over 50, means it is a society with a strict hierarchical order, respected without a need for justification. On the other side, power distance index with a score under 50 suggests that people in that country strive to even the distribution of power.

**2.** Individualism versus collectivism (IDV) labels the relationship between the individuals in a country. If the score attributed to this dimension is over 50, individualism is a dominant culture characteristic of a society, meaning that its members are expected to take care only of themselves and their immediate family. Additionally, typical of individualism are individual's actions and decision making. Opposed to that, scores under 50 stand for collectivist societies, with tightly knit social framework, in which members of a particular group look after each other in exchange for unquestioning loyalty. Individuals usually do

**3.** Dimension also differentiating countries regarding culture is masculinity or for some femininity (MAS). If the index score is above 50, it is a case of a masculine society characterized by achievement, heroism, assertiveness and preference of material rewards for success. Contrary to masculine societies, there are also feminine societies, whose MAS index is under 50. Members of such societies prefer cooperation, modesty and caring for the weak.

**4.** Uncertainty avoidance index (UAI) expresses the degree to which the members of a society feel uncomfortable with uncertainty, especially the fact that the future is unknown and insecure. Index scores higher than 50 expose high uncertainty avoidance, which involves avoiding risks and any changes. Members of such countries are mostly intolerant of unconventional behavior and innovative ideas. If the index score is under 50, the country expresses low uncertainty avoidance, causing a more relaxed attitude in which practice

**5.** Long-term orientation (LTO) versus short-term orientation describes society's attitude toward past, present and future. Long-term orientation countries are detected after index scores above 50. Those countries encourage thrift and efforts in modern education as a way to prepare for the future. On the other hand, index scores lower than 50 reflect short-term orientation societies, whose priority is to honor tradition and norms. Those countries are

as part of the research presented in this chapter [24].

nature of cultural characteristics within a country [25]:

not undertake decisions and actions on their own.

Quality of life is highly valued in feminine countries.

counts more than principles and risks are accepted as a norm.

not prone to societal change.

**Table 5.** Relative preferences of the future employer's organizational culture [23].

lowest score could have been expected, not just because it was the case of working population's preferences, but the literature proves that the market type is rarely a dominant organizational culture in construction industry, occasionally preferred only by contractors [34].

Finally, it is fascinating that the results of this study [23] show a distinct homogeneity of the tested sample. Clan is a dominantly preferred culture type regardless of gender: in terms of gender, adhocracy and hierarchy won pretty much the same scores, only market culture was somewhat rather chosen by male students than by female students. Furthermore, the differences among students depending on the faculty department at which they study, desired place of work and desired future employment practically do not exist. It should be highlighted that homogeneity in terms of desired employment is contrary to previous findings about differences between contractors and designers, often resulting in conflicts due to different ways of thinking [22, 32–34]. Such congruity among future contractors and designers might actually be interpreted as a future competitive advantage of Croatian construction industry, because it should contribute to the success of communication between main stakeholders involved in the same building project.

There are only four civil engineering faculties in Croatia. The results presented earlier focused on students' expectations at only one of those faculties. Therefore, the results illustrate only the sample preferences and not the preferences of the whole student population at relevant faculties in Croatia. However, given that Croatia is a small country and considering that the results provide information about the attitudes of nearly a quarter of the population, they can be considered a fair indication of overall trends of organizational culture in Croatian construction industry.

### **5. National culture's influence on competitiveness**

World Economic Forum defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity that the country can achieve [9]. Official opinion of the National Competitiveness Council in Croatia is built on that basis, describing competitiveness as a group of elements, development policies and institutions which, by their correlation, influence the general level of productivity and the quality of the business sector and business environment [37].

Countries around the world are at different stages of their development and thus at a different level of their competitiveness. Building on previous findings [38–40] that some culture variables affect economic and business performance at the country level, a more detailed crosscountry investigation of national culture's role in explaining competitiveness was conducted as part of the research presented in this chapter [24].

As for the national culture dimensions, this study [24] relied on Hofstede's culture dimensions. Hofstede and his team defined six different dimensions and based on their comprehensive studies, they attributed specific scores to each dimension, so they would describe the nature of cultural characteristics within a country [25]:

**1.** Power distance illustrates the degree to which inequalities in the society are expected and accepted by all, and especially the less powerful members of that society. High power distance index (PDI), with score over 50, means it is a society with a strict hierarchical order, respected without a need for justification. On the other side, power distance index with a score under 50 suggests that people in that country strive to even the distribution of power.

lowest score could have been expected, not just because it was the case of working population's preferences, but the literature proves that the market type is rarely a dominant organizational

Finally, it is fascinating that the results of this study [23] show a distinct homogeneity of the tested sample. Clan is a dominantly preferred culture type regardless of gender: in terms of gender, adhocracy and hierarchy won pretty much the same scores, only market culture was somewhat rather chosen by male students than by female students. Furthermore, the differences among students depending on the faculty department at which they study, desired place of work and desired future employment practically do not exist. It should be highlighted that homogeneity in terms of desired employment is contrary to previous findings about differences between contractors and designers, often resulting in conflicts due to different ways of thinking [22, 32–34]. Such congruity among future contractors and designers might actually be interpreted as a future competitive advantage of Croatian construction industry, because it should contribute to the success of communication between main stakeholders involved in

There are only four civil engineering faculties in Croatia. The results presented earlier focused on students' expectations at only one of those faculties. Therefore, the results illustrate only the sample preferences and not the preferences of the whole student population at relevant faculties in Croatia. However, given that Croatia is a small country and considering that the results provide information about the attitudes of nearly a quarter of the population, they can be considered a fair indication of overall trends of organizational culture in Croatian

World Economic Forum defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity that the country can achieve [9]. Official opinion of the National Competitiveness Council in Croatia is built on that basis, describing competitiveness as a group of elements, development policies and institutions which, by their correlation, influence the general level of productivity and the quality of the business sector and busi-

**5. National culture's influence on competitiveness**

culture in construction industry, occasionally preferred only by contractors [34].

**Culture type Mean score** Clan 38.90 Adhocracy 24.61 Market 13.23 Hierarchy 23.25

**Table 5.** Relative preferences of the future employer's organizational culture [23].

the same building project.

96 Organizational Culture

construction industry.

ness environment [37].


**6.** Indulgence versus restraint (IVR) assesses whether people freely accept fulfillment of natural human desires. Countries whose index score is above 50 are indulgent societies which encourage their members to enjoy life and have fun. On contrary, countries whose index is under 50 are restraining societies that suppress enjoyment by imposing strict norms of social behavior.

**Economy GCI Culture dimension scores**

**PDI IDV MAS UAI LTO IVR**

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Organizational Culture as a Determinant of Construction Companies' Competitiveness: Case…

All GCI and culture dimensions considered in the cross-country investigation are presented in **Table 6**.


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**Economy GCI Culture dimension scores**

social behavior.

in **Table 6**.

98 Organizational Culture

**6.** Indulgence versus restraint (IVR) assesses whether people freely accept fulfillment of natural human desires. Countries whose index score is above 50 are indulgent societies which encourage their members to enjoy life and have fun. On contrary, countries whose index is under 50 are restraining societies that suppress enjoyment by imposing strict norms of

All GCI and culture dimensions considered in the cross-country investigation are presented

**PDI IDV MAS UAI LTO IVR**


important strategic question in Croatia. Especially the competitiveness of the most important

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At the same time, competitiveness is determined by various factors. The studies presented in this chapter assume that many of these are people driven, thus justifying exploring the relation of competitiveness with organizational culture and the need for learning about organiza-

Not just that construction industry is an important economy segment, but characteristics of organizational culture in construction industry significantly differ from culture features of

• increased use of subcontractors makes the situation more difficult because the higher levels are likely to be the employees of the main contractor, whereas the lower levels are likely to

• distant locations have led to a situation that construction companies usually have at least two cultural identities: the corporate or "head office"-based culture and a distinctive, sepa-

• there are some cultural differences among the main stakeholders involved in a project,

Knowing that, and appreciating the fact of substantial differences in national cultures, the necessity for research of construction industry's organizational culture peculiarities in specific national context is imposed. This chapter presents results of a comprehensive case study regarding organizational culture of Croatian construction industry and its influence on

It has been stated that the currently dominant organizational culture of the tested sample is hierarchy, although other culture types are also present in some subcategories of construction industry. Different behavior resulting from different culture profiles could by all means develop miscommunication conflicts while working together in projects, so organizational

Beside knowledge about the current culture profile, management of organizational culture as a part of efficient organizational change management, surely needs the insight into the preferred organizational culture too. Presented results showed that the clan is predominantly preferred culture type in almost all construction companies, as well as among the engineers-to-be.

The greatest value of this chapter for practitioners is the idea that gradual implementation of

• meet employees' expectations, thus making them more satisfied and successful workers,

• have a positive effect on organizational learning, innovativeness and competitiveness, since the study [26] reporting on such effects of adhocracy culture, identified that clan culture

• improve the communication among different stakeholders working together,

economy segments, like construction industry, is being emphasized.

• there is no common trend between occupational levels;

be the employees of subcontractors;

culture needs to be managed carefully.

type might have the same effect

the clan culture in construction companies in Croatia would:

especially between designers and contractors.

• there is a lack of communication between different occupational levels;

rate project culture associated with each unique construction project;

tional culture in more detail.

other industries [12]:

competitiveness.

**Table 6.** Global competitiveness index and national culture dimensions' scores of selected countries [24].

It is evident from **Table 6** that selected countries differ both in terms of competitiveness and cultural characteristics. Different statistical methods were used to perceive their relationship.

Bivariate correlations showed that competitiveness has a negative correlation with power distance index, masculinity and uncertainty avoidance index, respectively. This could imply lower competitiveness as in case of Croatia. Other culture dimensions showed a positive correlation with competitiveness. However, due to multidimensional nature of national culture, the overall effect of national culture to competitiveness was assessed by using ordinary least squares regression analysis including all six culture variables simultaneously. Additionally, beside GCI and culture dimensions' scores, GDP per capita was included into the regression model in order to control economic development. It turned out that the created model had a high predicting value, since it explained 74% of variability (R<sup>2</sup> = 0.738) [24].

In such a model, only two culture dimensions remained statistically significant predictors of competitiveness: uncertainty avoidance with a negative sign and long-term versus short-term orientation with a positive association [24]. Clearly, in modern times, characterized by the globally accelerating pace of change, individuals must accept risk as the norm. Otherwise, as in the case of Croatia, high UAI score undermines the national competitiveness level. Yet, the increase of long-term orientation index improves national competitiveness.

Such findings can be used by policy makers in order to improve national competitiveness, but are interesting also in terms of business level discussion, since connection of macroeconomic competitiveness with company level competitiveness seems to be straightforward and factors enhancing national competitiveness are very likely to encourage companies' competitiveness. A great authority on competitiveness Michael Porter said long ago that it was the firms, not nations, which competed in international markets [41], and his opinion is still appreciated [39]. Such opinion suggests that national competitiveness can be considered as the aggregation of competitiveness of all businesses operating in a country, meaning that a country is competitive when its companies are competitive. Therefore, it is possible to extrapolate the above presented findings to the business level.

### **6. Conclusions**

Owing to its status of a transitional country, and especially after becoming a full member of the EU, importance of competitiveness of the overall economy has definitely been the most important strategic question in Croatia. Especially the competitiveness of the most important economy segments, like construction industry, is being emphasized.

At the same time, competitiveness is determined by various factors. The studies presented in this chapter assume that many of these are people driven, thus justifying exploring the relation of competitiveness with organizational culture and the need for learning about organizational culture in more detail.

Not just that construction industry is an important economy segment, but characteristics of organizational culture in construction industry significantly differ from culture features of other industries [12]:

• there is no common trend between occupational levels;

It is evident from **Table 6** that selected countries differ both in terms of competitiveness and cultural characteristics. Different statistical methods were used to perceive their relationship. Bivariate correlations showed that competitiveness has a negative correlation with power distance index, masculinity and uncertainty avoidance index, respectively. This could imply lower competitiveness as in case of Croatia. Other culture dimensions showed a positive correlation with competitiveness. However, due to multidimensional nature of national culture, the overall effect of national culture to competitiveness was assessed by using ordinary least squares regression analysis including all six culture variables simultaneously. Additionally, beside GCI and culture dimensions' scores, GDP per capita was included into the regression model in order to control economic development. It turned out that the created model had a

Trinidad and Tobago 3.9 47 16 58 55 13 80 Argentina 3.8 49 46 56 86 20 62 Bangladesh 3.8 80 20 55 60 47 20 Pakistan 3.4 55 14 50 70 50 0 Venezuela 3.3 81 12 73 76 16 100

**Table 6.** Global competitiveness index and national culture dimensions' scores of selected countries [24].

**PDI IDV MAS UAI LTO IVR**

In such a model, only two culture dimensions remained statistically significant predictors of competitiveness: uncertainty avoidance with a negative sign and long-term versus short-term orientation with a positive association [24]. Clearly, in modern times, characterized by the globally accelerating pace of change, individuals must accept risk as the norm. Otherwise, as in the case of Croatia, high UAI score undermines the national competitiveness level. Yet, the

Such findings can be used by policy makers in order to improve national competitiveness, but are interesting also in terms of business level discussion, since connection of macroeconomic competitiveness with company level competitiveness seems to be straightforward and factors enhancing national competitiveness are very likely to encourage companies' competitiveness. A great authority on competitiveness Michael Porter said long ago that it was the firms, not nations, which competed in international markets [41], and his opinion is still appreciated [39]. Such opinion suggests that national competitiveness can be considered as the aggregation of competitiveness of all businesses operating in a country, meaning that a country is competitive when its companies are competitive. Therefore, it is possible to extrapolate the

Owing to its status of a transitional country, and especially after becoming a full member of the EU, importance of competitiveness of the overall economy has definitely been the most

high predicting value, since it explained 74% of variability (R<sup>2</sup> = 0.738) [24].

**Economy GCI Culture dimension scores**

100 Organizational Culture

increase of long-term orientation index improves national competitiveness.

above presented findings to the business level.

**6. Conclusions**


Knowing that, and appreciating the fact of substantial differences in national cultures, the necessity for research of construction industry's organizational culture peculiarities in specific national context is imposed. This chapter presents results of a comprehensive case study regarding organizational culture of Croatian construction industry and its influence on competitiveness.

It has been stated that the currently dominant organizational culture of the tested sample is hierarchy, although other culture types are also present in some subcategories of construction industry. Different behavior resulting from different culture profiles could by all means develop miscommunication conflicts while working together in projects, so organizational culture needs to be managed carefully.

Beside knowledge about the current culture profile, management of organizational culture as a part of efficient organizational change management, surely needs the insight into the preferred organizational culture too. Presented results showed that the clan is predominantly preferred culture type in almost all construction companies, as well as among the engineers-to-be.

The greatest value of this chapter for practitioners is the idea that gradual implementation of the clan culture in construction companies in Croatia would:


All of these have a potential of easing the achievement of strategic goals in the long run and increasing both the company and industry level competitiveness. Since it was proven that human commitment mediates relationship between organizational culture and organizational performance [42], these specific findings should be seen as a motive for conscious action of managers, toward culture change which would lead to performance improvement.

[6] Liu DM, Jie XW. New thinking for strategy: green, innovation and sharing. In: Proceedings of International Conference on Strategic Management (ICSM2017); June

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[8] Balkyte A, Tvaronavičiene M. Perception of competitiveness in the context of sustainable development: Facets of "sustainable competitiveness". Journal of Business Economics

[9] Schwab K, editor. The Global Competitiveness Report 2015-2016 [Internet]. Geneva, Switzerland: World Economic Forum; 2016. Available from: http://reports.weforum.org/

[10] Willar D, Trigunarsyah B, Coffey V. Organisational culture and quality management system implementation in Indonesian construction companies. Engineering, Construction and Architectural Management. 2016;**23**(2):114-133. DOI: 10.1108/ECAM-02-2015-0026

[11] International Council for Research and Innovation in Building and Construction. Tijhuis W. Report on developments in construction culture research: overview of activities of CIB W112 "Culture in construction" [Internet]. 2012. Available from: https://heyblom.

[12] Riley MJ, Clare-Brown D. Comparison of cultures in construction and manufacturing industries. Journal of Management in Engineering. 2001;**17**;(3):149-158. DOI: 10.1061/

[14] Ozorhon B, Arditi D, Dikmen I, Birgonul MT. Implications of culture in the performance of international construction joint ventures. Journal of Construction Engineering and Management. 2008;**134**(5):361-370. DOI: 10.1061/(ASCE)0733-9364(2008)134:5(361) [15] Chan EHW, Tse RYC. Cultural considerations in international construction contracts. Journal of Construction Engineering and Management. 2003;**129**;(4):375-381. DOI: 10.1061/

[16] Giritli H, Öney-Yazici E, Topcu-Oraz G, Acar E. The interplay between leadership and organizational culture in the Turkish construction sector. International Journal of Project

[17] Cameron KS, Quinn RE. Diagnosing and Changing Organizational Culture: Based on Competing Values Framework. 3rd ed. San Francisco: Jossey-Bass; 2011. 268 p. ISBN:

[18] Quinn RE, Rohrbaugh J. A special model of effectiveness criteria: Towards a competing values approach to organizational analysis. Management Science. 1983;**29**(3):363-377.

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978-0-470-65026-4

DOI: 10.1287/mnsc.29.3.363

As for the scholars, presented findings generate value through building on the body of knowledge regarding culture and competitiveness issues in specific national contexts. Although applied statistical methods confirmed the reliability of results, the main limitation of the case study presented in this chapter is definitely the size of tested samples. Therefore, further research should analyze additional subjects too. It might be interesting also to measure company level competitiveness directly and relate it to determined organizational culture.

Starting from the initially defined purpose, over the discussion of results to the conclusion, this chapter tries to provide an outline of the current and preferred culture profile characteristics of the Croatian construction industry together with their competitiveness implications.

## **Author details**

Ivana Šandrk Nukić

Address all correspondence to: isandrknukic@gfos.hr

Faculty of Civil Engineering Osijek, Department for Organization, Technology and Management, J.J. Strossmayer University of Osijek, Osijek, Croatia

### **References**


[6] Liu DM, Jie XW. New thinking for strategy: green, innovation and sharing. In: Proceedings of International Conference on Strategic Management (ICSM2017); June 11-12, 2017; Copenhagen. 2017. pp. 567-574

All of these have a potential of easing the achievement of strategic goals in the long run and increasing both the company and industry level competitiveness. Since it was proven that human commitment mediates relationship between organizational culture and organizational performance [42], these specific findings should be seen as a motive for conscious action

As for the scholars, presented findings generate value through building on the body of knowledge regarding culture and competitiveness issues in specific national contexts. Although applied statistical methods confirmed the reliability of results, the main limitation of the case study presented in this chapter is definitely the size of tested samples. Therefore, further research should analyze additional subjects too. It might be interesting also to measure company level competitiveness directly and relate it to determined organizational culture.

Starting from the initially defined purpose, over the discussion of results to the conclusion, this chapter tries to provide an outline of the current and preferred culture profile characteristics of the Croatian construction industry together with their competitiveness implications.

Faculty of Civil Engineering Osijek, Department for Organization, Technology and

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Ivana Šandrk Nukić

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**Chapter 6**

**Provisional chapter**

**Reflex-Adaptive Organizational Structure in the**

**Reflex-Adaptive Organizational Structure in the** 

DOI: 10.5772/intechopen.78627

This work reflects the results of research on the study and creation of a new class of highly effective organizational structures of the reflex-adaptive type in the context of the implementation of a large-scale project. The research is based on the information paradigm of organizational structures' formation. From this perspective, any manufacturing company is represented as a system that converts resources into a final product on the basis of an information imperative. The structure of the production management and executive subsystems is selected. The composition and functions of the subsystems and the formation of system elements' feedbacks are described. Also, the development methodology of the management and executive subsystems is presented along with synthesis of these subsystems into the cybernetic type organizational structure. The chapter focuses on developing enterprise substructure of the executive subsystem, which is called the project matrix, which factually is its network model. Its properties, and transformation rules are described, and the algorithm of its formation is presented. The system properties of the organizational structure are examined in detail. The methodology for forming the reflex-adaptive organizational structure is presented. Particular attention is paid to the quantitative estimation of flexibility and stableness of organizational structures.

**Keywords:** reflex-adaptive organizational structure, cybernetic model of organizational system, synthesis of organizational structures, logical and functional connection,

Current trends in the development of world production are characterized by socioeconomic instability, a significant turbulence in the services market which requires from organizations

informational flexibility index, project matrix, life cycle of the project

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

© 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use,

distribution, and reproduction in any medium, provided the original work is properly cited.

**Implementation of Large-Scale Projects**

**Implementation of Large-Scale Projects**

Additional information is available at the end of the chapter

Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.78627

Andrey Morozenko

Andrey Morozenko

**Abstract**

**1. Introduction**

#### **Reflex-Adaptive Organizational Structure in the Implementation of Large-Scale Projects Reflex-Adaptive Organizational Structure in the Implementation of Large-Scale Projects**

DOI: 10.5772/intechopen.78627

#### Andrey Morozenko Andrey Morozenko

Additional information is available at the end of the chapter Additional information is available at the end of the chapter

http://dx.doi.org/10.5772/intechopen.78627

#### **Abstract**

This work reflects the results of research on the study and creation of a new class of highly effective organizational structures of the reflex-adaptive type in the context of the implementation of a large-scale project. The research is based on the information paradigm of organizational structures' formation. From this perspective, any manufacturing company is represented as a system that converts resources into a final product on the basis of an information imperative. The structure of the production management and executive subsystems is selected. The composition and functions of the subsystems and the formation of system elements' feedbacks are described. Also, the development methodology of the management and executive subsystems is presented along with synthesis of these subsystems into the cybernetic type organizational structure. The chapter focuses on developing enterprise substructure of the executive subsystem, which is called the project matrix, which factually is its network model. Its properties, and transformation rules are described, and the algorithm of its formation is presented. The system properties of the organizational structure are examined in detail. The methodology for forming the reflex-adaptive organizational structure is presented. Particular attention is paid to the quantitative estimation of flexibility and stableness of organizational structures.

**Keywords:** reflex-adaptive organizational structure, cybernetic model of organizational system, synthesis of organizational structures, logical and functional connection, informational flexibility index, project matrix, life cycle of the project

### **1. Introduction**

Current trends in the development of world production are characterized by socioeconomic instability, a significant turbulence in the services market which requires from organizations

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

implementing large-scale projects to use additional competitive advantages that ensure their reliable and sustainable development. The complex of measures to improve the efficiency of enterprises includes various areas: the introduction of new materials and technologies, the use of productive machines and mechanisms, raising the technical level of personnel, etc. However, the modern science of management emphasizes the possibilities of the organizational structure, since its properties have a decisive influence on the efficiency of any company's activity.

units that execute typical for them piece of work. These units appear as backbone elements of

Reflex-Adaptive Organizational Structure in the Implementation of Large-Scale Projects

http://dx.doi.org/10.5772/intechopen.78627

109

It is relevant to make the following observation. In all research papers that observe reflexadaptive organizational structures, we have always referred to its belonging with the investment and construction project. This is not quite true. We have chosen the investment and construction project as a vivid example of the full-cycle construction: from the idea to the commissioning for the customer. Of course, the ideas explicated in the reflex-adaptive paradigm can be applied at any stage of the construction, but the greatest effect will be obtained by using a reflex-adaptive organizational structure when developing full-life cycle

So, the full-cycle (or a turn-key project) construction's organizational structure is a set of functional blocks united by a sole production program that manages their activities, synchronizes

Thus, in the organizational structure of the project, two subsystems are separated out: man-

Such production links organization within the enterprise allowing it to solve the problems of gaining such advantages as flexibility, stableness, safety, and resistance successfully as a participant of relations. Let us briefly consider the ways of solving these problems from the

A general notion of enterprise flexibility is the ability to conform to changing market requirements for produced goods. The information paradigm allows eluding inaccuracies and solely qualitative characteristics of an important property of industrial production. We can identify the backbone of this quality and numerically estimate its significance using the pragmatic information concept [9], which was introduced in the middle of the last century by Russian scientist A.A. Kharkevich. If the analysis of goods realization reveals its negative trend, considering that its causes are determined, then we can interpret this situation as a production program deviation from the target values. Further based on measures adoption, we stabilize or increase realization volumes. This adjustment process to the changing market can be

In other words, based on the obtained information of goods market functioning changes, managing decisions are elaborated that parry the detrimental effect of this developments. The management system of the reflective-adaptive organizational structure is designed precisely to analyze changes of the external and internal environments of the enterprise as a system. On

*P*\_\_1 *P*0

is the probability of achieving the goal after receiving information.

is the probability of achieving the goal before receiv-

(1)

agement and executive. The executive system includes functional production blocks.

their work, and controls the processing of program tasks (**Figure 1**).

standpoint of the information imperative.

*I* = log *P*<sup>1</sup> − log *P*<sup>0</sup> − log

this basis, it is necessary to develop managing solutions.

where *I* is the pragmatic information, *P*<sup>0</sup>

the organizational structure and in the technological conception—functional blocks.

projects.

expressed as:

ing information, and *P*<sup>1</sup>

The scientific substantiation and development of the scientific and methodological foundations of the formation of the enterprises' reflex-adaptive organizational structure with specified qualities of flexibility, stableness, and safety, their introduction into production practice represent an actual problem in modern conditions, the solution of which will significantly increase the efficiency of the enterprise's functioning.

The aim of the research, the results of which are reflected in this chapter, is to study the properties of the reflex-adaptive structure and to determine the qualities of its main components as system elements in the implementation of large-scale projects.

The study also aimed to find ways of forming the organizational structure of a large-scale project fully meeting the requirements of the project's life cycle. The formulated problem is considered on the example of investment and construction project in which the stages and phases of the life cycle are clearly expressed and the necessary transformation of the organizational structure is well traced.

The scientific community has long and fruitfully engaged in researching various aspects of organizational structures, their effectiveness in various conditions of functioning, researching the internal environment [1–3]. The level of problem's research related to the formation of highly effective organizational structures for large-scale projects is determined by the scientific and practical experience of the scientific school of the Moscow State University of Civil Engineering [4–8], where this problem has been comprehensively studied for many years by the university's scientists in cooperation with the world's leading specialists in this field, and research materials are presented at scientific conferences and in the scientific press.

The result of the research was the concept of an organizational matrix for the large-scale construction project which is a network model of the stages of the project's life cycle.

On modern views, progress of highly effective organizational systems is based on the concept of information approach to studying and forming complex engineering facility's organizational structure. Based upon the idea of reflex-adaptive systems of investment and construction project (ICP), we will consider the features of this structure.

### **2. Cybernetic model of ICP organizational structure**

The main thing that distinguishes highly effective organizational systems is a pronounced structure which manifests itself as an ICP having a number of relatively stand-alone production units that execute typical for them piece of work. These units appear as backbone elements of the organizational structure and in the technological conception—functional blocks.

implementing large-scale projects to use additional competitive advantages that ensure their reliable and sustainable development. The complex of measures to improve the efficiency of enterprises includes various areas: the introduction of new materials and technologies, the use of productive machines and mechanisms, raising the technical level of personnel, etc. However, the modern science of management emphasizes the possibilities of the organizational structure, since its properties have a decisive influence on the efficiency of any

The scientific substantiation and development of the scientific and methodological foundations of the formation of the enterprises' reflex-adaptive organizational structure with specified qualities of flexibility, stableness, and safety, their introduction into production practice represent an actual problem in modern conditions, the solution of which will significantly

The aim of the research, the results of which are reflected in this chapter, is to study the properties of the reflex-adaptive structure and to determine the qualities of its main components

The study also aimed to find ways of forming the organizational structure of a large-scale project fully meeting the requirements of the project's life cycle. The formulated problem is considered on the example of investment and construction project in which the stages and phases of the life cycle are clearly expressed and the necessary transformation of the organi-

The scientific community has long and fruitfully engaged in researching various aspects of organizational structures, their effectiveness in various conditions of functioning, researching the internal environment [1–3]. The level of problem's research related to the formation of highly effective organizational structures for large-scale projects is determined by the scientific and practical experience of the scientific school of the Moscow State University of Civil Engineering [4–8], where this problem has been comprehensively studied for many years by the university's scientists in cooperation with the world's leading specialists in this field, and

The result of the research was the concept of an organizational matrix for the large-scale con-

On modern views, progress of highly effective organizational systems is based on the concept of information approach to studying and forming complex engineering facility's organizational structure. Based upon the idea of reflex-adaptive systems of investment and construc-

The main thing that distinguishes highly effective organizational systems is a pronounced structure which manifests itself as an ICP having a number of relatively stand-alone production

research materials are presented at scientific conferences and in the scientific press.

struction project which is a network model of the stages of the project's life cycle.

tion project (ICP), we will consider the features of this structure.

**2. Cybernetic model of ICP organizational structure**

company's activity.

108 Organizational Culture

zational structure is well traced.

increase the efficiency of the enterprise's functioning.

as system elements in the implementation of large-scale projects.

It is relevant to make the following observation. In all research papers that observe reflexadaptive organizational structures, we have always referred to its belonging with the investment and construction project. This is not quite true. We have chosen the investment and construction project as a vivid example of the full-cycle construction: from the idea to the commissioning for the customer. Of course, the ideas explicated in the reflex-adaptive paradigm can be applied at any stage of the construction, but the greatest effect will be obtained by using a reflex-adaptive organizational structure when developing full-life cycle projects.

So, the full-cycle (or a turn-key project) construction's organizational structure is a set of functional blocks united by a sole production program that manages their activities, synchronizes their work, and controls the processing of program tasks (**Figure 1**).

Thus, in the organizational structure of the project, two subsystems are separated out: management and executive. The executive system includes functional production blocks.

Such production links organization within the enterprise allowing it to solve the problems of gaining such advantages as flexibility, stableness, safety, and resistance successfully as a participant of relations. Let us briefly consider the ways of solving these problems from the standpoint of the information imperative.

A general notion of enterprise flexibility is the ability to conform to changing market requirements for produced goods. The information paradigm allows eluding inaccuracies and solely qualitative characteristics of an important property of industrial production. We can identify the backbone of this quality and numerically estimate its significance using the pragmatic information concept [9], which was introduced in the middle of the last century by Russian scientist A.A. Kharkevich. If the analysis of goods realization reveals its negative trend, considering that its causes are determined, then we can interpret this situation as a production program deviation from the target values. Further based on measures adoption, we stabilize or increase realization volumes. This adjustment process to the changing market can be expressed as:

$$I = \log P\_{\text{i}} - \log P\_{\text{o}} - \log \frac{P\_{\text{i}}}{P\_{\text{o}}} \tag{1}$$

where *I* is the pragmatic information, *P*<sup>0</sup> is the probability of achieving the goal before receiving information, and *P*<sup>1</sup> is the probability of achieving the goal after receiving information.

In other words, based on the obtained information of goods market functioning changes, managing decisions are elaborated that parry the detrimental effect of this developments. The management system of the reflective-adaptive organizational structure is designed precisely to analyze changes of the external and internal environments of the enterprise as a system. On this basis, it is necessary to develop managing solutions.

A similar approach is possible when forming the quality of the system's reliability. In the information view, system reliability is the probability of its efficiency in case of internal environment system's changes. System efficiency condition is the permanence of its internal environment or its restoration from adverse effects on the system.

$$\frac{d\mathbf{l}}{dt} = \mathbf{R} \tag{2}$$

Task of the internal environment permanence assurance is also guaranteed by the organization's management system. It produces managing decisions, and if the external resource is involved, then the decision is strategic for the system; on the contrary, if the resource is redistributed within the system, then the solution has a tactical level. The decision is operational if

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111

Underneath the simple condition of enterprise work reliability, there are big problems of permanence assurance of internal environment characteristics. Permanent work with members of the work collective is crucial considering that any manufacturing enterprise is a socioeconomic entity. The issues of increasing work culture level, organizational culture, and organizational climate are the subject of executive's constant attention seeing that they are important

Man is the source of productive labor. His educational and cultural level, commitment to selfrealization, and inner self-esteem become the force that moves man to perfection, the active

If the manager of any level wants his team to work successfully, he should see in his subordi-

This is achieved by a wide armory of educational work, by whole system of moral and material stimulations, the creation of hospitable companionship in the team. All these relationships and activities strengthening complex of the personnel create a specific atmosphere of work, which is called the organizational climate [3]. Organizational climate, which is cultivated by the leaders of the organization, generates the organizational culture that is carried by all

In all our considerations about the reflex-adaptive organizational structure, we mean organi-

In case of production and technological problems, successful solution, as well as increasing the improvement of design and engineering quality, the bottleneck in the complex engineering facilities construction is the problem of managing solutions' control and rational

A rational solution is to minimize the use of resources while the system performs its target function. Let us briefly explain this definition. The intention of any production system is the achievement of certain state parameters, which are called the goal and appear as the result of the target achieving process. During the implementation of the target function, the system is affected by internal and external influences that angle the theoretical path of the system in the phase field of variables and do not allow the system to achieve target parameters. The

**3. Disadvantages in the established practice of implementing** 

realization of his views and needs. And first of all, this is reflected in social work.

nates not soulless operators, but interested supporters, implementers of given tasks.

the resource was not involved.

members of the collective.

**large-scale projects**

envisioning [10].

and directly influence the enterprise efficiency.

zations with a high production and corporate culture.

where *I* is the information about the state of the internal environment and *R* is the resource that is necessary in parrying the changes in the internal environment.

**Figure 1.** Cybernetic model of reflex-adaptive organizational structure. Source: own.

Task of the internal environment permanence assurance is also guaranteed by the organization's management system. It produces managing decisions, and if the external resource is involved, then the decision is strategic for the system; on the contrary, if the resource is redistributed within the system, then the solution has a tactical level. The decision is operational if the resource was not involved.

A similar approach is possible when forming the quality of the system's reliability. In the information view, system reliability is the probability of its efficiency in case of internal environment system's changes. System efficiency condition is the permanence of its internal

where *I* is the information about the state of the internal environment and *R* is the resource

*dt* <sup>=</sup> *<sup>R</sup>* (2)

environment or its restoration from adverse effects on the system.

that is necessary in parrying the changes in the internal environment.

**Figure 1.** Cybernetic model of reflex-adaptive organizational structure. Source: own.

\_\_*dI*

110 Organizational Culture

Underneath the simple condition of enterprise work reliability, there are big problems of permanence assurance of internal environment characteristics. Permanent work with members of the work collective is crucial considering that any manufacturing enterprise is a socioeconomic entity. The issues of increasing work culture level, organizational culture, and organizational climate are the subject of executive's constant attention seeing that they are important and directly influence the enterprise efficiency.

Man is the source of productive labor. His educational and cultural level, commitment to selfrealization, and inner self-esteem become the force that moves man to perfection, the active realization of his views and needs. And first of all, this is reflected in social work.

If the manager of any level wants his team to work successfully, he should see in his subordinates not soulless operators, but interested supporters, implementers of given tasks.

This is achieved by a wide armory of educational work, by whole system of moral and material stimulations, the creation of hospitable companionship in the team. All these relationships and activities strengthening complex of the personnel create a specific atmosphere of work, which is called the organizational climate [3]. Organizational climate, which is cultivated by the leaders of the organization, generates the organizational culture that is carried by all members of the collective.

In all our considerations about the reflex-adaptive organizational structure, we mean organizations with a high production and corporate culture.
